April 8th, 2010 1:28 PM by Lehel S.
LOS ANGELES - Apartment vacancy rates in Los Angeles County will continue to decline this year with rents also weathering further erosion, according to a report released Wednesday.
A slew of USC faculty experts and other top industry players gathered Wednesday to assess the market at the Casden Real Estate Economics Forecast at the Omni Los Angeles Hotel.
The event was presented by the USC Lusk Center for Real Estate.
According to the report, average rents in Los Angeles county will decline another 3.5 percent in 2010.
The region is expected to see a total decrease of 5.2 percent between the fourth quarter of 2009 and the fourth quarter of 2011.
Some areas aren't seeing any growth in the construction of apartments.
New apartment units were delivered in all of the county's submarkets last year except the San Gabriel and Antelope valleys.
The county lost more than 142,000 jobs last year, with the biggest declines occurring in manufacturing, trade, information, professional and business services, construction and government sectors, according to the report.
A panel discussion was also held at Wednesday's event to address distressed real estate solutions.
"The FDIC has ID'd over 1,000 banks as being overexposed to commercial real estate," said Marc D. Renard, executive managing director of the Global Capital Markets Group for Cushman & Wakefield of California Inc.
Michael A. Berman, president and CEO of CW Capital, a national lender to the multifamily and commercial real estate industry, said defaults and eminent defaults "are coming in as a tidal wave."
Will foreclosures increase over the next few years?
"Absolutely," Berman said. "There's very little liquidity out there unless you have an all-cash buyer. It's hard to get financing unless you're in a strong market with strong tenancies."
Berman said some struggling owners of multifamily units are operating under a false sense of entitlement.
"They've defaulted on their loans and yet they think they are entitled to a loan rework," he said.
A loan modification wouldn't necessarily be out the question, Berman said, but the borrower would have to come to the table with a sound business plan that makes financial sense and also be prepared to put in some "sweat equity."
Apartments rents are expected to stay flat in Riverside and San Bernardino counties, but will inch up in San Diego County because of a more positive employment outlook, the study said.